Top 10 most stupid things people do when they retire: You’ve done your research, and now you know everything you need to know about retirement. Put away savings. Paying off debts. A plan for getting from work to leisure time. Let’s have a good time!
But there are some retirement mistakes that people don’t notice.
Maybe it’s the rush of freedom that comes with the first year of retirement. You might want to keep helping people even though you have less money. And as we get older, our bodies can change in ways that make it harder to be thrifty, and our minds can change in ways that make it hard to make good decisions.
Here are some unwise decisions that could tank your golden years, and how to avoid them.
1. Forget to make/update legal documents
When did you last look at your will and plan for your estate? Things change, so our legal documents also need to change.
Maybe you just got a new grandchild or your brother or sister died last year. Maybe your son, who had agreed to be your executor, no longer thinks he can do the job.
Or maybe you had to sell some of the jewelry you had planned to leave to your great-niece because of the pandemic. If so, make sure those pieces aren’t in the will. If they are, the person who ends up being the executor might go crazy trying to find these strange pieces.
2. Fail to budget
You have a set income now, right? When you retire, some costs do go down. You’ll no longer have to drive 40 miles to work, and you won’t have to buy and keep up a work wardrobe. But some other costs may rise. For instance:
- Medical bills: Sorry to break it to you, but Medicare doesn’t pay for everything. Depending on the Medicare coverage you choose, you may have to pay for things like glasses, hearing aids, and most dental work.
- Help at home: If you can no longer clean your house or yard, you will need to ask for help. Your kids are grown up and have their own lives, so you can’t expect them to spend one of their few days off each week doing your cleaning and laundry and doing chores outside. That means you might have to add this to your budget as a new bill.
- Food: If you need to eat a certain way because of health problems, the ingredients could get expensive pretty quickly. And if these health problems make it hard for you to cook, you might end up using takeaway or meal delivery services, which are much more expensive than making meals from scratch in your own kitchen.
- Changes to the house: Some people need grab bars in the bathroom or a wheelchair ramp in the front because they are sick or getting older.
This doesn’t mean that the end is near. It just means that you have to live on a budget, just like when you were working. Keep track of your monthly spending by writing it down or using a service like YNAB (You Need A Budget), which makes the process easier (and automates it to boot). Also, companies like Trim or Truebill make it easy to find memberships and subscriptions you no longer want and cancel them.
3. Fall into debt
In an ideal world, you’ve planned to retire with no debt. But it’s too easy to fall back into debt, especially if you haven’t made a budget that takes into account the fact that you’re now on a fixed income.
If you have more months than money, it’s time to figure out where your money is going. This probably means you’ll have to make some choices, like dropping one of your streaming services or cooking more instead of ordering in.
Some coverages are one-time things, like gifts for weddings or graduations, trips to see family, car repairs, or emergency loans to family members. Others, like higher insurance costs or property taxes, are likely (but are never fun when they arrive). But you should include all of these things in your spending plan, under headings like “emergency fund,” “vacations,” and “giving.”
4. Spend fixed income on children who are grown
We want our children to have the best lives possible. But sometimes, helping them could hurt our own comfort and safety in the long run.
For example, it’s becoming more common for people in their 20s and even early 30s to live with their parents. Some of them do offer to pay the rent, but some parents won’t take them up on it.
And parents, ask yourself: Do you often drive the “kids” around, let them use your car, buy their groceries, or pick up the tab at restaurants? Do you add your kids to your phone plan for free or pay for extra streaming services to make sure everyone is happy?
Even when their kids are out on their own, parents often still help out. The Pew Research Center says that parents are helping out with both money emergencies and basic costs like rent or utilities. Nearly 6 out of 10 parents with adult children between the ages of 18 and 29 say they helped them with money in the past year.
You must put on your own oxygen mask first, as the flight attendants tell you. Before you help your kids or grandkids, you should take a hard look at your own finances and ask yourself if you can really afford to help everyone forever.
Does sound mean? This is what’s worse: Having to call those grown-up children in 10 years and say, “I can’t pay my basic bills. Could you send some money to me? Or, could I move in with you?”
Worst of all is the chance that your children won’t be able to help you, which means you might have to live in extreme poverty in your last years.
5. Withdraw too much money
You might want to do a little bit of everything when you retire. After all, you no longer have to ask for time off for things like vacations and spa days. Lastly, you can buy season tickets to your favorite sports team or subscribe to a theatre or dance company. You can take riding lessons, spend a lot of money on fancy kitchen tools, or buy more power tools.
But really, can you?
If you claim Social Security before you reach full retirement age, your benefits will be permanently cut. Most people say that you shouldn’t take out more than 4% of your account each year. If you spend too much, you might use up your retirement savings faster than you should.
Then there’s the chance (really, the likelihood) that the market will go down when you’re old. With less money in your retirement account, taking out that 4% means the money will run out faster.
Having a decent amount of cash on hand can help because it reduces how much you’ll need to take out. Having a budget that lets you have some fun, but not all of it at once also helps.
6. Let yourself to be alone
For a while, some people do pretty well on their own. But the National Institute on Aging says that being alone for a long time can cause serious physical and mental health problems. Depression, anxiety, memory loss, high blood pressure, obesity, a weaker immune system, and heart disease are some of them. From what the NIA says:
“Older adults are at higher risk for social isolation and loneliness due to changes in health and social connections that can come with growing older, hearing, vision, and memory loss, disability, trouble getting around, and/or the loss of family and friends.”
How to act? What you like to do makes a difference. The NIA suggests volunteering, sitting in on classes at a college or university, getting a pet (if you’re physically able), joining an exercise class, picking up an old hobby or starting a new one, going to a senior center or library often, and staying in touch with family and friends through video chat or other technology.
7. Always pick up the check
Parents often automatically pick up the tab because they think their grown children are not yet financially stable. Or, they fight with their friends over who will pay, either because they care about them or because they want to be the best.
Don’t do this. Find other ways to show you care. Tell your family and friends that, because you have a fixed income, you will now need separate checks. Or, you could have a potluck at your house.
8. Fail to ask for senior discounts
My friend and I always go shopping on Senior Day at Kroger, when all store brands are 10% off, and on Senior Tuesday at Walgreens, where everything is 20% off.
The dentist of a friend gives discounts to people over 65. Being over 55 gets us senior movie ticket deals. You won’t know if other stores and service providers will give you a discount unless you ask. So ask.
9. Lend money
Sometimes it’s okay because you know the person is good at it. But sometimes you’ll get stiffed by a relative or friend.
Money Talks News founder Stacy Johnson offers best-practice tips in “Should I Lend Money to My Kids?” (For example, everything should be in writing.)
Remember: They say never to lend more than you can afford to lose. They’re right.
10. Answer the phone
When the phone says “unknown caller” or “out of area caller,” my partner and I let the machine take the call. Nine times out of ten, the person who calls hangs up, and people who leave messages always want money.
Let voicemail get it so you don’t end up giving it to your old school or falling for a scam. And if you’re not sure if a request is real, ask another person.
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